Professional Documents
Culture Documents
System of Cities
System of Cities
Systems of Cities
Integrating National and Local Policies
Connecting Institutions and Infrastructure
Making pro-poor
policies a city
priority
Supporting city
economies
Promoting
a safe and
sustainable
urban environment
Encouraging
progressive
land and
housing markets
The square in the circle is an iconic symbol of the ideal city, spanning cultures across
the globe, from the Middle East to Asia, from Latin America to Africa and Europe. The
square is a metaphor for the house, and the circle is the universe encompassing it.
Foreword
From the earliest times, cities have been centers of democracy, creativity, and economic
activity. Why? Economics and geography inform us that density and agglomeration are
essential for productivity and growth. Cities
also serve as catalysts for collective action,
decision-making, and accountability.
The World Bank is putting forth its new Urban
and Local Government Strategy at a critical
time. For the rst time in history more than
half the worlds people live in cities. Over 90
percent of urban growth is occurring in the
developing world, adding an estimated 70 million new residents to urban areas each year.
During the next two decades, the urban population of the worlds two poorest regions
South Asia and Sub-Saharan Africais expected to double.
It is estimated that today one billion people
live in urban slums in developing countries.
Improvement in urban conditions, as demonstrated by many successful programs around
the world, shows that slums can become vibrant and well integrated parts of a city, as in
Senegal, Singapore, Thailand, and Vietnam.
The demands of poverty alleviation, climate
change and sustainable growth will put todays developing cities to the test. An estimated 70 percent of greenhouse gas emissions
come from cities and more than 70 percent
of energy is consumed in urban areas. This
places cities at the forefront of the climate
change agenda where denser, more compact cities will be the essential urban form in
the years ahead.
The new strategy also inaugurates the
Decade of the City, a decade that will be remembered for recognizing cities at the core
of growth and human development. Never
before has there been so much interest in cities: city associations, citywide programs, cityuniversity and private sector partnerships. In
developing countries, cities often provide the
rst opportunity for elected ofcials to meet
Contents
Foreword
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Copyright 2009 The International Bank for Reconstruction and Development/The World Bank
Photos were collected from World Bank staff, the World Banks Photo Library, the Institute for Research and Urban
Planning of Curitiba, and Stock.xchng photographers Jurgen de Clercq, David Garzn Rodrguez, Ccile Geng, and
Jos A. Warletta.
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To reach the increasing number of secondary cities, where much urban growth
is happening today, the Bank will expand
on its wholesaling approaches by working through nancial intermediaries and
by developing national and state programs that retail nancial services and
technical support to local governments.
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A system of citiesdriving
growth, reducing poverty
Urbanization in the developing world was
once considered too fast and unmanageable, something to be resisted and controlled. Efforts by many national, state, and local
governments have been devoted to curbing
it. Indeed, this thinking represents the old
paradigm. Many policymakers now recognize that urbanization is not only inevitableit
is also a powerful force for economic growth
and poverty reduction. This new paradigm
is grounded in the notion that densityand
the urbanization that drives itis essential to
achieving agglomeration economies and productivity gains. Function, not size, is the metric for measuring a citys performance. So,
how can urbanization be managed to harness
its potential for economic development?
Box 1.
Box 2.
New diagnostic
frameworks to
support national
urban strategies
Urbanization policies should focus on increasing the efciency of the transformation from
a rural to an urban economy, in the process
balancing agglomeration benets and congestion costs from concentration. The most
important market failures to be addressed are
those associated with land markets. Increasing the spatial efciency of production is inherently linked to how the use of the same piece
of land changes to accommodate economic
density. For places with incipient urbanization,
it becomes important that land is registered
and property rights are allocated and protected. The national institutions responsible for
City management
If urbanization is to be harnessed for its potential to deliver growth and improved livelihoods for urban residents, cities and local
governments need to be positioned to exploit
that potential. Yet a recurring theme across
most of the developing world is the ambiguity
and confusion over the roles and mandates
of national, state, and local government actors in delivering services at the local level.
Great strides have been made in recent
years in devolving authority to the local governments, as countries have increasingly
pursued decentralization. For many, however, this process has been characterized by
mixed signals, inconsistent legal and regulatory frameworks, and wide discrepancies between assigned and actual responsibility for
delivering services. This is often the result of a
mismatch between expenditure and revenue
assignments, conicting mandates between
national, state and local actors, and uneven
capacity across local governments.
Professional development. Capacity building to improve local government management is essential. But it needs to go beyond
the provision of training to include reforms that
change the rules of the game, using incentives and rule-based policy frameworks. Providing resources to the local government tier
on a performance basis can instill a sense of
competition for resources and act as an incentive to reform. These reform measures
could range from nancial management, accountability, local revenue collection, economic performance, and a host of other areas.
Other methods that have proven successful are professional certication programs
for municipal staff that elevate, professionalize, and promote their development. The
key is to design a system that recognizes
heterogeneity across the local government
Urban governance
Infrastructure service delivery
Urban transport infrastructure and services
are the backbone of an efcient city system.
Rapidly growing urban populations and rising
numbers of private vehicles are overwhelming
many cities, resulting in increased congestion,
less mobility, more accidents, and poor air
quality. Responses to these intraurban challenges include an emphasis on coordinating
land use planning and transportation and promoting affordable public transport, with incentives for proper maintenance. Urban-rural and
interregional linkages are also important in
enabling a city system to function beyond the
city core through connective infrastructure.
Another critical issue is the inadequate provision of basic infrastructurewater and sanitation, waste disposal, and powerto urban
residents. More than 50 percent of the urban
population in South Asia and 40 percent in
Sub-Saharan Africa lacks access to sanitation services.
These deciencies have real economic consequences. In Latin American cities, poor or
inadequate infrastructure is estimated to have
reduced urban economic output by 10 to 15
percent. The impact seems to be even higher
on small rms and home-based enterprises,
which cannot afford more reliable private
sources, such as power generators and wells
for water.
Municipal nance
National governments typically have devolved
service delivery and expenditure responsibilities
to the local level but have retained control over
signicant revenue sources. Central governments have tended to maintain decisionmaking
Making pro-poor
policies a city priority
Narrowly focused neighborhood slum upgrading interventions, while generally effective, have fallen well short of addressing
the magnitude and scope of expanding informality and slums. In addition to pursuing
sound macroeconomic policies aimed at
enhancing growth, cities need to be better
equipped to address urban poverty. This
business line aims to support cities and
national governments in addressing urban
poverty by expanding policy-based interventions and scaling up investments in services for the poor citywide and nationwide. It
will be underpinned by urban poverty analysis to guide policy decisions. Partnerships
will be encouraged with nongovernment
organizations, community-based organizations, and the private sector.
Many of todays urban poor in developing
countries live in remote locations due to the
high cost of housing in the city core. Living in
peripheral urban locations, particularly without adequate access to transport services,
can mean exclusion from a range of urban
facilities, services, and jobs. In many areas,
neighborhood stigma, which can reduce
peoples access to jobs and increase other
types of discrimination, is also a major constraint for the poor.
Several countries with national approaches
to slums have reduced or stabilized slum
growth in the last 15 years. In Brazil, Colombia, Mexico, South Africa, Thailand, and
Tunisia, political commitment at the central
government level has led to large-scale slum
upgrading and service provision for the poor
through legal and regulatory reform on land
policy, regularization programs, and inclusive
policies.
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Box 4. Millennium
Development Goal for
slum improvement
Millennium Development Goal 7 sets the objective for urban poverty alleviation by calling
for the improvement of the lives of at least
100 million slum dwellers. Estimates suggest that around one-third of the urban population in developing countriesnearly one
billion peopleare living in slums. Slums are
generally characterized as informal settlements with poor quality housing, limited
access to services, high densities, and insecure land tenure. Insecure tenure puts
the urban poor at constant risk of eviction,
prevents them from building assets and accessing credit, inhibits using ones home for
income-generating activities, and does not
allow for investments in service provision.
Countries farthest from reaching the MDG
target on slums are mainly in Sub-Saharan
Africa, where urbanization is rapid and local
governments lack the capacity to accommodate new residents.
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What are the priorities for urbanization policies in cities and towns in intermediate and
advanced stages of urbanization?
In addition to facilitating density is ensuring
that urban settlements are well connected to
each other to gain from complementarities
in their production structures. Market towns
facilitate internal scale economies for rms,
while also serving as conduits for marketing
and distributing agricultural produce. Medium-size cities provide localization economies
for manufacturing industriesbenets that
come from the co-location of manufacturers
within one or two industries that can benet
from supply chain linkages. And the largest
cities provide urbanization economies, characterized by diverse facilities that foster innovation in business, government, and education services.
As demand for land bids up prices in metropolises, investors make decisions on relocating
businessesweighing the costs of wages,
rents, and congestion with the benets of agglomeration. It is common for manufacturing
activities to deconcentrate from city centers
to their surrounding suburbsbut not for
services.
Such data have been used to dene appropriate entry points for technical assistance and
investments in improving a citys economic
prospects. Going forward, the Bank will ensure
appropriate linkages of subnational Investment
Climate Assessment and Doing Business data
with the design of the next generation of local
economic development projects.
Supporting urban regeneration. For postindustrial cities in transition, the Bank can
assist by supporting urban regeneration and
browneld redevelopment approaches (see
boxes 5, 6, and 7). While the Banks engagement in these areas has been somewhat limited, growing demand, particularly in Eastern
Box 5.
Cultural heritage
assets promote
local economic
development
Box 6.
Reclaiming Eastern
Europes land assets
Large swaths of cities across Central and Eastern Europe still showcase the derelict remnants
of command economies. Abandoned or underused industrial land covers 13 percent of
Prague and 27 percent of Soa. Many of these
sites, known as brownelds, are located centrally and in close proximity to commercial centers. Brown they may be, but developers and
city planners see opportunities, if only someone
would remove waste and clean up the contamination, a common and costly obstacle.
Many cities have already done this, starting by
treating brownelds in different ways. Some are
attractive enough to be developed entirely with
private funding. Private cash is turning Bucharests Semanatoarea Plant into a business and
retail park, with a conference center and 1,200
apartments.
Other sites are more challenging: unclear
ownership can make cleanup more difcult
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Analyzing competitiveness. City development strategies with a local economic development focus have often applied competitiveness analysis to identify promising
manufacturing or service industries of a city
economy. Specic sectors can be targeted,
such as tourism, light manufacturing, sheries
or port activities. Or the strategy might adopt
a spatial approach by focusing on redevelopment of central business districts or providing
and investors wary. In some cases a partnership with governments can assuage fears, as
was done at the Skoda Plzen rehabilitation of
a 180 hectare site using nancing from the
Czech government and the private sector, but
highly contaminated sites may require full government nancing. The German government
had to invest $1.5b in over 100 projects to
turn abandoned steel works and mining operations in the Ruhr Valley into sites for other
kinds of production, parks, ofce and residential spaces.
The World Bank, for example, is carrying out a
pilot work program of stock-taking analysis in
a few interested cities, and learning exchanges with cities in Western Europe that have
experience in browneld redevelopment, to
build a foundation for assistance with browneld sites. Compiling case studies and best
practices from similar projects elsewhere will
hopefully usher in new public-private nancing schemes and much needed technical assistance. Soon more city brownelds will have
shoots of green.
markets in urban areas and attract investment, broaden retail services, and create jobs.
Due to the informality of living conditions and
market opportunities in inner-city areas, there
has been severe undercounting in population
and market potential. Initial indications suggest good scope for enhancing services and
attracting investment (in addition to expanding the local tax base). In Johannesburg, for
example, a partnership with the Post Bank
could help in providing basic savings and loan
services down market, targeting the underserved residents and businesses in the citys
Urban Development Zone.
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Four key housing and land issues consistently pose the greatest challenges in most
urban areas: planning for markets, public land
management, property rights, and housing
nance. Dealing with each set of challenges
Box 8.
Promoting pro-poor
urban growth
encroachment before building the infrastructure, which should occur only after effective demand is conrmed and resources are
available.
Managing public lands. Recent Bank technical assistance to governments on public
land management is paying dividends and
should be expanded to policy-based lending
where appropriate. While not all governments
are large land holders, those that do control
a large stock in the public sector need to be
strategic in the way they manage those assets, including the way they are disposed.
Bank advice on public land management
has addressed inventorying and accounting
for public land assets, clarifying rules and
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Box 9.
Numbers on doors:
how to address the
developing world
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this path dependency into account in the design of cities, it is important that consumers
respond accordingly. In cities where densities
are low, consumers respond by locking into
vehicle purchases, housing types, and locations that prevent them from responding to
price signals and government-induced incentives to change behaviors. Good examples of
cities that have addressed the challenge of
reducing dependence on cars are Hong Kong
and Singapore, which limited individual car
use and urban sprawl early on.
Reducing energy use through efciency measures and improved urban planning can reduce a citys dependence on imported fuels
and reduce energy costs, freeing up resources for improved city services. It brings socioeconomic benets, such as reduced commuting times, improved air quality and health,
and more green and community space. And
it improves competitiveness by lowering energy bills and operating costs. But there may
be substantial barriers to energy efciency
such as rigid procurement and budgeting
policies, low energy prices, inadequate planning and design methods, and limitations on
public nancing. There may also be limited
technical and risk management skills, large
project development costs, public repayment
concerns, limited equity, and the need for
new contractual mechanisms. Public end-users may have limited incentives, unclear ownership of cost savings, and a general lack of
awareness. And nanciers may be faced with
high transaction costs, high perceived risks,
behavioral biases, and problems in adopting
new technologies.
Linking environmental health, energy efciency, and livability concerns, leading cities are
now considering how to build sustainability
into the way they plan for the future. This has
important climate change co-benets, because a greater emphasis on public transit,
higher density, energy-efcient buildings, and
better facilities management can contribute
to city development objectives while reducing
a citys greenhouse gas emissions.
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A sharper focus on climate change and its impact on developing country cities will require
retooling the approaches to urban environmental management. The World Banks approach is informed by a ve-cluster analysis
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Cluster 4: Disaster risks to the city system comprise extreme events within and
around the city, such as cyclones, storms,
earthquakes, oods, and landslides.
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Box 10.
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collection and transport, and upgrade an existing disposal facility to meet the citys future
long-term needs. Technical assistance and
institutional support will help Amman improve
strategic planning and evaluate performance in
the solid waste sector.
The project has substantial environmental benets. Engineering services will enhance the
environmental and operational performance
of existing disposal facilities. And current practices will be more low-carbon and allow for the
generation of green electricity.
Attached to this lending operation, the World
Bank has entered into an agreement with the
municipality to develop and implement a Clean
Development Project operation, and to purchase part of the certied emission reductions
resulting from this project. These amount to
0.9 to 0.95m tons of CO2 equivalent from 2009
to 2014, creating revenues estimated at $15m
by 2014. The project will also generate green
electricity (about 160,000 MWh by 2014), with
revenues estimated at $25m to 2019. The project will thus generate net revenues of $16.9m in
present values, following an incremental investment of $23.5m.
Curitiba is not alone. Singapore, Stockholm, Yokohama, and Vancouver all show that it is possible to realize greater socioeconomic value from
smaller and renewable resource bases while simultaneously decreasing harmful pollution and
unnecessary waste. Urban sustainability of this
kind is a powerful investment that will pay compounding dividends. In a fast-paced and uncertain global economy, cities that adopt such an
integrated approach are more likely to survive
shocks, attract businesses, and manage costs.
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Cross-cutting approaches
to reinforce the strategy
Four building blocks will support the implementation of the Banks Urban Strategy:
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Knowledge programs, product development, and dissemination. These activities will ensure that the Bank maintains
its leadership in developing knowledge
programs and products, while promoting the dissemination of knowledge and
good practices through a variety of instruments and initiatives. The Urban
Research Symposium will be continued, coupled with expanded collaboration with universities and think tanks
on critical areas of research interest. A
new Scholar in Residence Program will
reinforce this partnership, with an initial
focus on urban planning. New and ongoing knowledge products and services
are also being developed or brought
in line within the framework of the new
Urban Strategy.
Financing strategies. Financing strategies for urban development will address
a range of circumstances, depending
on the nancial status of the local government, the impact of the global economic and nancial crisis, and the quality
and coverage of existing infrastructure
services.
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